Parks deception stemmed from budget reform

“Consequently, it also cannot be determined with certainty whether the matter was reported to Ruth Coleman, who became acting director in January 2002 and went on to serve as director until July 2012,” the report said.

The report takes note of a red flag that went ignored. As reported first by The Watchdog, Department of Finance officials were notified of large discrepancies in the state’s 500 special funds by the State Controller’s Office through annual reports that ceased in 2003.

The investigators found those reports caused finance officials to repeatedly ask the parks department to explain the discrepancies. The discrepancies were never explained, and the AG’s investigators were unable to determine why the finance department didn’t investigate further at that time.

Shortly after the hidden funds were disclosed to the public, the Department of Finance reviewed all of its special funds and found an additional $233 million was underreported for the state budget due to accounting errors, but that none of it was intentionally hidden.

One reason for the underreporting is the differences in how funds are accounted for by the finance department and the controller’s office, which use different methodologies. A law signed by Gov. Jerry Brown in response to the scandal requires departments to compare their budget reports and financial reports detailing how much money is in the state’s special funds.